CRISIL reaffirms credit ratings of Entertainment Network on bank facilities and debt instruments; Stock gains 2%

3 Mar 2022 , 09:45 AM

CRISIL has reaffirmed its credit ratings in respect of Entertainment Network (India) Limited’s bank facilities and debt instruments. The credit rating agency has been reaffirmed on Total Bank Loan Facilities Rated Rs100 crore (enhanced from Rs50 crore).

The long-term rating has been reaffirmed at CRISIL AA+/Stable and short-term rating at CRISIL A1+. For Rs50 crore Non-Convertible Debentures (NCDs) CRISIL AA+/Stable rating has been reaffirmed. The rating on Rs300 crore Commercial Paper has been reaffirmed at CRISIL A1+.

At around 9.48 am, Entertainment Network (India) Ltd was trading at Rs172 per share up by Rs3.55 or 2.11% from its previous closing of Rs168.45 per share on the BSE.

“CRISIL Ratings has reaffirmed its ‘CRISIL AA+/Stable/CRISIL A1+’ ratings on the bank facilities and Rs350 crore debt programmes of Entertainment Network (India) Limited (ENIL). The ratings continue to reflect the sequential improvement in revenue in the second and third quarters of fiscal 2022 as radio advertisement (ad) volumes grew. The Ebitda (earnings before interest, taxes, depreciation and amortisation) improved to Rs35.6 crore in the third quarter (against loss of Rs18.7 crore incurred in the second quarter) on account of tight cost-control measures and improvement in ad volumes. However, the company is launching Mirchi Digital Platform in the international and domestic markets, which will weaken Ebitda margin in fiscal 2023,” company shared CRISIL’s rating rationale on Wednesday.

The ratings also continue to reflect the market leadership of ENIL in the FM radio broadcasting industry, comfortable financial risk profile backed by strong liquidity, and support of the parent, Bennett Coleman and Company Ltd (BCCL; ‘CRISIL AAA/Stable’). These strengths are partially offset by significant dependence on ad revenue and exposure to intense competition, it added.

Analytical Approach
For arriving at its ratings, CRISIL Ratings has combined the business and financial risk profiles of ENIL and its subsidiaries, Alternate Brand Solutions (India) Ltd, Entertainment Network, Inc (EN, INC), Global Entertainment Network Limited WLL and Mirchi Bahrain WLL, which have business and financial linkages with ENIL. The operations of ENIL in the USA are housed under EN, INC. CRISIL Ratings has also applied its parent notch-up criteria to factor in the extent of support expected from BCCL.